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2023 (4) TMI 409 - SC - Service TaxLevy of Service Tax - Design Services or not - whether activity of import of Engineering Design & Drawings from the sister companies by the notice during the period under dispute i.e., June, 2007 to September, 2010 is classifiable under taxable category design services under section 65(35b) read with Section 65(105) (zzzzd) of the Finance Act, 1994? - HELD THAT:- The definition of “design services” is a wide and conclusive one, specifically excluding only fashion design and interior designing, which were already taxable under separate taxable category - In the present case, the respondent was engaged in manufacture of Wind Turbine Generator (WTG). It entered into ‘product development and purchase agreement’ with three of its sister companies. It is required to be noted that the said designs were to be exclusively used by the respondent in the territory of India and it was a tailormade design. The respondent engaged the sister concern M/s SEG for the activity of “Engineering Design & Drawings” used in manufacturing of WTG, that was reduced as blue print on paper and delivered to the respondent on the same medium. Such “designs” were subjected to the service tax even as per the clarification by the Board dated 18.03.2011 on the issue of applicability of indirect taxes on packaged software. Therefore, as such, the respondent was liable to pay service tax on the “design services” received from abroad under reverse charge - M/s SEG raised the invoice/bill on the assessee treating it as ‘paper’. However, when the said bill of entry was presented treating the same as ‘paper’ for which the duty payable was ‘Nil’. Therefore, neither any custom duty was paid due to exemption from payment of duty treating it as ‘paper’ nor the service tax was paid. The definition of “design services” is very clear and it is wide enough to cover all “design services.” Merely because “Engineering Design & Drawings” prepared and supplied by sister company were shown as ‘goods’ under the Customs Act and in the bill of entry, by that itself cannot be a ground to take such services out of the definition of “design services” under the Finance Act, 1994. The order of CESTAT to the extent that, the respondent is not liable to pay service tax as “design services” on importing various models of “Engineering Design & Drawings” for the purpose of manufacturing of Wind Turbine Generator (WTG), as defined under Section 65(35b) r/w section 65(105)(zzzzd) of the Finance Act, 1994 is hereby quashed and set aside - the matter is remitted back to the CESTAT to consider the grounds raised on behalf of the respondent, namely, whether the services (if any) rendered by a foreign entity will not fall within the purview of “design services” and that the department was not justified in invoking the extended period of limitation. Appeal disposed off.
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